IndiGo’s Parent InterGlobe Aviation Settles Promoter Dispute Case With SEBI

By – Ashwathy Nair

The company settled the matter by paying a settlement charge of ₹2.1 crores.
Corporate governance lapses were being alleged at the company.
The matter got settled without admitting or denying any violation on its part.

The country’s largest airline IndiGo’s parent company, InterGlobe Aviation has settled a case of alleged corporate lapses as well as listing norms violations that were raised by the co-promoter of the company Rakesh Gangwal. The case has been settled with Sebi.

On Tuesday, as per Sebi, the matter has been settled by the company “without admitting or denying any violation on its part”, by compensating a settlement charge of ₹2.1 crores.

The order comes out more than a year after the co-promoter of InterGlobe Aviation, Gangwal had alleged a corporate governance lapses at the company. There are differences between Gangwal and co-promoter Rahul Bhatia over certain corporate governance matters, the allegations were rejected by the camp of Bhatia.

In July 2019, in order to seek the intervention to address certain issues, Gagwal had written to Sebi. According to the 10-page order, several complaints from Gangwal were being received by Sebi.

On 5^th May 2020, for the matter, G Ramar was appointed as the Adjudicating Officer.

Based on the complaints, the issue was being examined by Sebi and based on its investigation, on 10^th November 2020, a show-cause notice was issued with respect to InterGlobe Aviation.

Pending adjudication proceedings, InterGlobe Aviation proposed, by way of a consent order, to resolve the instant proceedings brought against it, without accepting or rejecting the findings of fact and the conclusions of the law. On 23^rd December 2020, the settlement application was filed.

By way of a letter dated 7^th January 2021, the company proposed to pay little over ₹2.1 crores “towards a full and final settlement of all regulatory, civil or criminal proceedings in relation to the facts contained in the SCN (Show Cause Notice) without admitting or denying any infringement on its part.”

High Powered Advisory Committee (HPAC) of Sebi recommended the settlement proposal and on 25^th January, the same was approved by the panel of Whole Time Members of Sebi. On 5^th February, the same was communicated to the company and the amount was paid on 8^th February.

The complaints of Gangwal related to alleged corporate governance lapses, along with those pertaining to Related Party Transactions (RPTs) between the company and the IGE Group.

Gangwal owns about 37% of InterGlobe Aviation, along with its affiliates, while Bhatia and its affiliates (IGE Group) have around 38% of the company’s shareholding.

Among other items, it was also alleged that the company’s Red Herring Prospectus (RHP) dated 16^th October 2015, was misrepresented.